Question

Witt Corporation has 78,000 shares of $4 par value common stock outstanding. At year-end, the company...

Witt Corporation has 78,000 shares of $4 par value common stock outstanding. At year-end, the company declares a four percent stock dividend. The market price of the stock on the declaration date is $21 per share. Four weeks later, the company issues the shares of stock to stockholders.

a. Prepare the journal entry for the declaration of the stock dividend.

b. Prepare the journal entry for the issuance of the stock dividend.

c. Assume that the company declared a 40 percent stock dividend rather than a four percent stock dividend. Prepare the journal entries for

(1) the declaration of the stock dividend and

(2) the issuance of the stock dividend.

Business   Accounting   
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Answer #1

a) Journal entry

Date General Journal Debit Credit
stock dividend (78000*4%*21) 65520
Common Stock dividend distributable 12480
Paid in capital in excess of par -Common 53040
Common Stock dividend distributable 12480
Common Stock 12480

b) Journal entry

Date General Journal Debit Credit
stock dividend (78000*40%*4) 124800
Common Stock dividend distributable 124800
Common Stock dividend distributable 124800
Common Stock 124800
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